The past year has been one of incredible peaks in crop prices, then a terrible slump. It has been a year of volatility and there is no obvious direction forward. Some still expect the “long term commodity bull market” to recover and keep running. Others think it’s dead. Regardless of which view is correct, farmers have enjoyed great pricing opportunities and suffered terrible lost opportunities in the past year. In the seventh and final instalment of the series, Western Producer markets expert Ed White asked a number of prairie farm marketing advisers what farmers could learn from this experience.
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John Duvenaud – Wild Oats Grain Market Advisory, Winnipeg
- Never take things for granted. Always assume the worst is going to happen.
- Keep selling, no matter whether prices are going up or down. Sell in increments. Try not to sell on dips, but if prices keep going down, don’t hold back from selling altogether, because no one knows how low things can go.
- We start selling when the combines start up and we make sure we always have some crop left the following summer, and we always finish crop sales within a crop year.
David Drozd – Ag-Chieve, Winnipeg
- The farmer should have learned that he has to have a marketing plan. Farmers with a marketing plan were scaling-in some sales on opportune rallies and took care of their early cash flow needs into this part of the year, when we’re waiting for the next rally.
- It’s hard for humans like us to sell into a down market, but you have to do it sometimes. A farmer won’t sell canola off the combine at $10.50 if he recently saw $15 prices, but he’ll happily sell canola at $10.50 if he recently saw $6.50 prices.
- You’ve got to have a marketing plan. Know your cash flow needs and plan to sell appropriate amounts to meet your needs while you wait for the rallies.
Mike Krueger – The Money Farm, Fargo, N.D.
- You’ve got to do some marketing when we’re moving toward those incredibly high peaks.
- I don’t know for sure that we’ve put bottoms into these prices. My gut tells me we have. But I think volatility’s going to stay with us. We might not get back to the old highs, but we’ll climb out of these lows. When we do, you need to take advantage of the higher prices and not let them escape.
Brenda Tjaden Lepp – FarmLink Marketing Solutions, Winnipeg
- It’s very important to know where you’re at so that you can see what the change in prices really means to your farm. If you don’t have your own numbers lined up, if you don’t know your costs, if you don’t know when your fertilizer bill is coming due, if you don’t know how many bushels you’ve got in the bin, this kind of volatility is going to be very stressful.
- Be disciplined and get stuff done. Try to respect the advice of the analysts you pay good money to. Don’t refuse to sell. We had a lot of people who couldn’t pull the trigger on the way down, when prices were still a lot higher than they are today.
- You need to have your numbers in front of your eyes when the volatility is making it hard to tell which way is up, and which way is down. It’s hard to focus when things get so crazy, but in the end it’s all about cash that comes out of your bank account and cash that goes into your bank account, and if you want to keep on operating, you need long-term planning to keep more coming in than going out.
